Last orders for beer mat maker?

As another lorry empties its cargo of logs, German Miles waves to the driver, then brings his gaze back to the freshly felled tree trunks piling up in front of him.

"It's amazing to think," he says, "just this morning that wood was standing in the forest behind us, but that in a few days it'll probably be in coaster, in a bar, for drinking beer."

Having worked at the Katz Group since 1975, Mr Miles, who began as a printer and is now production manager, has had plenty of time to get used to the idea.

But to the outsider it is hard to grasp that this quiet corner of the Black Forest in South West Germany is home to the world's biggest producer of the humble beer mat.

The small pieces of cardboard - usually covered in the logo of a brewery or beer brand - are familiar to anyone who has spent a bit of time in pubs and bars, especially in the UK and mainland Europe.

The logs come form trees grown in sustainable forests close to the factory

Drinkers flip them, spin them, tear them and scrawl phone numbers on them, while a small dedicated group of enthusiasts (called tegestologists, though others have less kind epithets) collect them.

In Ireland - where beer mat use is the world's highest at more than 50 per person per year - the familiar brands they contain, such as Guinness and Jameson whiskey, mean that tourists pocket them as a souvenir.

Advertising tool

With the steady flow of trucks and the whirr of machinery in the background, nothing seems amiss at the group's main factory.

Except that these are days shrouded with uncertainty, with the firm's beer mat making business having gone into administration.

BEER MAT FACTS

The first wood pulp beer mat was made in 1892 by Robert Sputh of Dresden

They came to the UK in 1920, produced by the Watneys brewery, advertising its pale ale

Leo Pisker of Austria, has collected more than 150,000 different beer mats from 192 countries

Dean Gould of Felixstowe holds a host of beer mat world records including most flipped off a table, a bottle, a chin, and while blindfolded

It is difficult to see how this could happen at a company that has a 75% share of the estimated 5.5 billion beer mats - or coasters as they are known in the US and Australia - made globally last year.

Indeed, the Weisenbach factory alone - which takes in the logs and turns them to pulp before producing lightweight, highly absorbent board which it prints, cuts and packages - can make more than 12 million of what they call in Germany, Bierdeckel, every day.

But while they may have a fond place in people's hearts, ultimately the beer mat is just another advertising tool.

And the economic climate "has not helped" Katz's position, says group chief executive Garry Hobson, citing trends in the brewing and pub industries as denting demand.

Declining beer sales, as people opt to drink at home, have led to fewer orders while the closure of pubs (especially in the UK where some estimates put the rate of demise at five a day) mean there are fewer venues for beer mats to be used.

And the trends among brewers to merge and create even bigger global giants (for example SAB and Miller, the Heineken, Carlsberg and Scottish & Newcastle agreement and Budweiser's deal with Anheuser-Busch) have seen a fall in overall advertising spending, Mr Hobson says.

"A few years ago there were 10 main brewers worldwide, but the round after round of consolidation there are just five.

These are nervous times for workers in Weisenbach

"And even though the most dramatic deals have now been done, we have felt the impact of the shake-ups in the companies and of the people who would see the beer mat as part of their advertising."

Anxiety

These challenges, plus problems getting access to cash and some needs to "restructure" have left the firm desperately trying to find new investors.

Orders are still coming in and being met, with Katz's administrators confident it can be rescued as a going concern.

And at its sales commercial offices in the UK and Belgium, which are not subject to the administration proceedings, it is, the firm says, "business as usual".

But around the Weisenbach factory floor - from the wood pulping room to the printing section - the 150 staff seem anxious about the future.

Katz has another factory in Grosschirma, near Dresden, and the potential for any new investors wanting to cut costs cannot be ignored, says Mr Hobson, a Yorkshireman, who has made this pocket of Germany, close to the spa town of Baden-Baden, his home.

German Miles has seen vast technological changes at the company

The group already have a number of small sidelines - though one of them, the manufacture of branded ashtrays in the UK, fell by the wayside a few years back after laws limiting tobacco advertising were introduced, followed by the smoking ban.

However those "mock wood" circular discs found in a packets of supermarket-bought Camembert are made here, as are the thin sheets of board found at the back of some wardrobes.

But the firm needs to look at revitalising its main business, says Mr Hobson, who insists the beer mat is "undervalued" by both existing and potential customers.

Innovation

While the product is perhaps more associated with the smell of stale ale, the corridor leading to his office - the walls of which are lined with products made for brands from China to the Czech Republic - has a hint of the aroma of fresh wood shavings and sawdust.

A marketing tool can only be used if the end user has an affinity with it, and there's no doubt people have an affinity with the beer mat

Garry HobsonGroup chief executiveKatz Group

Picking up the dice from a chrome-plated Yahtzee set on his desk, he rolls them before reaching for a display book of the firm's latest coasters.

This is beermat 2.0 - the coaster that seems way too fancy to stack up and flip in a vain effort to impress girls.

There is shiny foil, ("to give a product a premium feel"), labels to peel off, wipe-clean coasters and mats which change appearance when rubbed against a hot hand or cold pint.

Another, aimed at football fans, has incorporated face paint in the colours of the German flag.

Logos are not just for continental lagers and spirits, but feature the Real Madrid football team, a mobile phone company and the Belgian version of the Pepperami.

And it seems the days of simply having square or round cardboard are over, with mats shaped as hands, trophies and footballs.

Student memories

Traditionalists may scoff, but Mr Hobson sees broadening the beer mat's reach as the way to tackle some of the industry's woes.

"A marketing tool can only be used if the end user has an affinity with it, and there's no doubt people have an affinity with the beer mat," he says.

The beer mats are for markets across the globe

"They pick it up, they play with it, they may not know they are doing it. They create games with it and they remember it. It's a part of the drinking culture."

A beer mat flipping competition at a trade event had been a big hit with brewers and marketers, who were taken "back to their student days", he adds.

With the well documented problems in the drinks trade, winning business from other industries is an essential part of a recovery plan, Mr Hobson says.

In the US, for example, where the firm has two businesses in New York state and Tennessee (both use the board made in Germany, though neither are subject to the administration proceedings) about 50% of its printing is for restaurants - which are using the mats to advertise special deals.

"People understand the product. They use it as an unobtrusive way of advertising and from the person in the bar's point of view, they see it as something that's always there," Mr Hobson says.

"But the perception of the coaster and the way it is used is quite traditional. Our responsibility, as market leaders is to bring innovation."

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